Audit Ch. 1 SB
True or false: The audit definition phrase "communicating the results to interested users" implies that all audit reports must be suitable for use for any and all individuals who may want to see the information.
False
Which of the following usually serves as the basis for evaluating management's assertions in the context of a financial statement audit?
Generally Accepted Accounting Principles (GAAP)
True or false: Assurance services can include almost any service provided by accounting professionals that involves capturing information, improving its quality or enhancing its usefulness for decision makers.
True
Independent professional services that improve the quality of information, or its context, for decision makers are called ______ services.
assurance
Oral or visual information, as well as paper or electronic documents that originate either within or outside the organization are all types of
audit evidence
The end product of an auditor's work is the ______.
audit opinion
Which of the following is a type of attest service?
auditing
The systematic process approach to auditing involves ______.
auditor objectivity evaluating audit evidence searching for audit evidence
In the context of a financial statement audit, generally accepted accounting principles usually serve as the established
criteria
The definition of assurance services focuses on __.
decision making
There is a(n) ______ relation between sample size and materiality, and a(n) ______ relation between sample size and desired level of assurance.
inverse, direct
The auditor's assessments of
materiality audit risk
Audit data analytics is using analysis,
modeling, visualization
Most of the auditor's work in arriving at an opinion on the financial statements consists of ______ audit evidence relating to management's assertions.
obtaining and evaluating
Data analytics is rapidly redefining the concepts of discovering and analyzing
patterns anomalies
Increasing use of audit data analytics _______ auditors' ability to ask the right questions and evaluate the answers yielded by the data.
places a greater premium on
Communicating results to interested users ______.
relates to the audit report varies based on the auditor's findings
Accounting professionals perform various services that provide assurance about the
reliability relevance
The increased used of data analytics in auditing ______.
requires the ability to query, manipulate and interpret information streamlines some tedious audit tasks
The fact that there should be a well-planned and thorough approach for conducting the audit is implied by the phrase
systematic process
True or false: The auditor's report, also known as the audit opinion, is the main product or output of the audit.
true
The most common type of audit report (opinion) issued by auditors is a(n) ______ opinion.
unqualified
These occur when a practitioner is engaged to issue a report on subject matter that is the responsibility of another party.
Attest services
Enhanced transparency of transactions, increased operating efficiency, and greater reliability of data and data trails are all results of the use of
blockchain
The use of decentralized, distributed digital ledgers that record economic transactions is allowed by
blockchain
In order to plan the audit properly, the audit team must make a preliminary assessment of the client's
business materiality
In order to develop and support an audit opinion, the auditor must obtain an understanding of the client's ______.
business and industry risks information systems
When planning an audit, the audit team must determine materiality and make a preliminary analysis of the entity's ______ to determine the risk of material misstatement (RMM).
business risks
Predictive audit data analytics ______.
combines firm, industry and market data to help auditors identify numbers that might be off
The final phase in the audit process is to ______.
evaluate the results and issue an audit report
The conceptual and procedural details of a financial statement audit build on the fundamental concepts of ______.
evidence materiality audit risk
Rapid advances in electronic technologies used by many businesses ______.
facilitates efficient corroboration of the reliability of data can create automatic audit trails
The amount by which a set of financial statements could be misstated without affecting the judgment of a reasonable person is referred to as
materiality
To ensure the audit is conducted effectively and efficiently it is important to ______.
properly plan the audit
When an auditor reports that the financial statements are fairly stated except for a misstatement identified in the inventory account, a(n) ______ opinion should be issued.
qualified
To increase the likelihood that a sample is representative of the population of transactions or account items, auditors use
random
For an audit report to be unqualified ______.
there must be no significant limitations imposed on the auditor's procedures the auditor must be independent the client's financial statements must be free of material departures from GAAP the audit must be done in accordance with applicable standards
When the financial statements are free of material misstatement and the auditor does not find it necessary to specify any exceptions to a "clean" audit opinion, the audit report issued is
unqualified